Trading Plan for 12/29

[pay]Pattern notes.
Friday’s opening gap up was retraced entirely back to Wednesday’s prior close. The upward bias didn’t resume before the noon hour’s end. Normally this pattern is likely to extend deeper into negative territory, at an accelerated pace, overcoming a second-to-last hour bounce. On a normal day. But Friday’s stand-alone session was not a normal day.

Obviously low volume for obvious reasons made the afternoon nothing but noise, bouncing back to session highs and no higher. Favorable GMAC news helped. But that doesn’t mean anything bullish came of the day.

Friday’s session was essentially a repeat of Wednesday, albeit occasionally at higher levels. Its upward tilt was still contained within Tuesday’s range. And it’s too late for Tuesday’s range to avoid being contained within Monday’s range. For those keeping score at home, that’s three consecutive sessions contained within Monday’s range, and two within Tuesday’s.

Tuesday’s inside day was tilted down pessimistically, but ineffectual for failing to touch Monday’s low. Wednesday and Friday’s upward tilts also suffered from short-comings – contained within the prior afternoon’s range, and failing to improve the open’s gap up, respectively. Their optimism punished Tuesday’s ineffectual pessimism, and now their own ineffectualness should be similarly punished. That is, assuming Santa and other myths have nothing more to say on the subject.

Indicators and Internals.
3-minute RSI was at its highest oversold Friday afternoon when the morning’s high was being retested. Normally this would require a retest. But being a retest makes that less reliable, not to mention being accompanied by unusually low volume.

Monday’s opportunities.
Dropping under 863’00 would start giving sellers traction to resume the slide that last Monday’s session was trying to resume. There’s still unfinished business below at 859’00, below which there lies plenty of old business still inhibiting a rally. But a favorable reaction to favorable news like GMAC could still spark a gap up above 874’00, which could still spark another detour that initially targets 883’00.[/pay]